Kansas lawmakers spent for $2.6 million to hire the firm Alvarez and Marsal as consultants to conduct an efficiency study on the state’s government early last month.
Tony Alvarez II and Bryan Marsal founded Alvarez and Marsal in 1983 after recognizing the opportunity to provide different advice and hands on support to organizations. The firm is expected to analyze the budget and budgeting process, while also making recommendations on efficiency and cost saving techniques.
“The A&M team brings significant leadership, management and operational experience to this assignment, including individuals who have played key roles at federal and state agencies, in the not-for-profit sector, and in the corporate arena, re-designing and restructuring organizations and developing and implementing new strategic plans,” Rep. Ron Ryckman Jr., house majority whip, said.
Shawn Sullivan, director of Kansas budget, said Kansas still has a budget problem, but legislators have decided it is time to have an outside company evaluate the budget and budgeting process.
“I think it’s a good investment,” Sullivan said. “When people ask if Kansas has revenue or spending problem, generally we have a long-term spending problem. Our staff has done a good job, but learning from other states on what works will be helpful.”
Alvarez and Marsal and three other bidders made presentations to Kansas legislators in a committee last month during a closed session. Among the bidders was McGladrey, who had offered to do the job for less than $1 million. Two other firms bid $2.5 million and $2.8 million.
“I mean, I think we have to look as it costs $2.6 million to do, and if you think it’s going to save more than you’re spending,” Dalton Maples, sophomore in secondary education, said. “But if there is chance it’s not going to save you more than what it costs, then I don’t see the point.”
Rachel Whitten, spokeswoman for House Speaker Ray Merrick, said McGladrey’s scope of work was not as extensive as A&M, according to the Topeka Capital Journal. A&M’s executive professionalism and experience made them the top technical choice. While McGladrey’s price was much lower, their bid was not as thorough.
Ryckman said that in addition to realizing cost savings they can implement immediately, they are hoping that many of the recommendations will be sustainable over the long term.
“If A&M produces a recommendation that allows us to run a particular program for a million dollars a year less than it costs us now, with no impact to our constituents, that’s a million dollars a year we’ll save in every budget going forward,” Ryckman said.
Sullivan said they are hoping to have a number of short-, medium- and long-term savings ideas.
“Our job is to see if there is any immediate short-term savings we can implement and then work with our staff on the medium- and long-term,” Sullivan said.
A&M is a firm that provides different advice and hands-on support to organizations facing operational and financial hurdles. Their largest successes, along with several other similar cases, are rebuilding and reopening schools after Hurricane Katrina hit New Orleans and advising U.S. Territories on the management of federal grants.
The firm was largely successful on a similar study in North Carolina; it helped the state’s Medicaid program from a $487 million shortfall in 2013 to a $130 million surplus last year.
There were contrasting results in Louisiana, however. Despite the firm’s consultation, Louisiana ended its last budget cycle with an estimated shortfall of $50 million, according to the New Orleans Times Picayune.
“Our state employees and the legislature have done what we can to reduce costs and find efficiency’s,” said Ryckman. “And still, the budget realities we face require us to do more. It will take all the expertise we can muster to find those efficiency’s and our budget shortfall requires that we do it now.”
Sullivan said budget makers and legislators are hoping to be more prepared and see an impact from the study.
“We are hoping that it can identify methods for us to operate more efficiently and to do so without receding service to the citizens in our state,” Sullivan said.